Edit ModuleShow Tags
Edit ModuleShow Tags

Pieology fires first in pizza battles


It was the great, unavoidable war. With so much money and interest flowing into the marinara-red-hot pizza category, many industry watchers see Pieology’s recent acquisition of Project Pie as the first move in an eventual wave of consolidation that will trim the number of players in this rocket-fueled restaurant segment.

Pieology CEO Carl Chang has long said “consolidation was the future for the fast-casual pizza segment.” Purchasing Project Pie, which had 35 units when acquired this June, is his company’s “first big move of hopefully many more to come.”

Carl Chang

 “Consolidation was the future,” says Pieology’s CEO Carl Chang.

With 105 units before the purchase, Rancho Santa Margarita, California-based Pieology also says it has more than 750 commitments in its pipeline in various stages of development. Its acquisition of Project Pie is intended to position the company to enter new markets that are complementary to its existing turf, while also allowing the company to accelerate its growth rate.

Chang predicted the pipeline of new players entering the pizza-packed field will taper in coming months, noting that he’s already seen a number of upstart brands go under near his home in Southern California.

He expects the chain to approach 200 open units by the end of 2016—which seems like a tall order given the array of well capitalized competitors and lack of daylight until the new year. Chang countered, adding that most of the company’s franchisees fall into the “sophisticated multi-unit operator” category, allowing the company to reduce its needs at the headquarters and grow in spurts.

Single-unit operators, he added, aren’t a good fit for the brand, given the company’s desire to avoid building a massive headquarters staff.

“Knowing my background and wanting to teach and mentor … it becomes challenging in our concept early on if we have 100 single-unit operators,” he said about opening the chain up to smaller franchisees. “At this stage in our growth, we’ve chosen not to entertain too many single-unit operators just because it’d be difficult to service their needs.”

Outside of the United States, Pieology has a single unit in Guam, and the brand has attracted a lot of interest, which Chang said will be one of its primary focuses after it passes the 200-unit milestone in the coming months.

Project Pie

A Pieology offering in the fast-casual pizza space. Project Pie is now under its wing.

Big-time backing

Rosemead, California-based Panda Express bought a minority stake in Pieology earlier this year, and that combination has improved the pizza chain’s buying power and economies of scale—further separating it from smaller brands that are also seeking to go national.

“When you’re looking to join a group in the fast-casual pizza segment, and when you look at somebody like us, look for the competitive advantages,” Chang said of anybody considering investing in a pizza concept. “We, now in partnership with Panda Express, operate like a 2,000-unit chain from a buying power perspective—you’re partnering with a group that can save you 3, 5, 7 points of margin—that’s significant, real money.”

Those savings, Chang said, will help the brand increase the gap between large pizza brands like Pieology, compared to the smaller startups that will enter the field with a significant cost disadvantage, among others.

Chang added that Pieology’s leadership shares his interest in acquisitions within the pizza category, which could be likened to Panda Express’ past consolidation within the crowded Chinese food market here in the United States. Shared as further evidence that further consolidation is imminent, he said the company has been contacted by other “copycat concepts” that have expressed an interest in converting to Pieology.

While all Project Pie stores will eventually convert to the Pieology flag, Chang said it will take time both on his end and for the company’s newest batch of franchisees.

“It’s not going to happen overnight,” he said. “It’s a capital investment, I can appreciate that, and we’re going to work with those franchise partners to make it as economically feasible as possible—it’s really about a partnership, not about the big bad wolf coming in and saying you have to do this.”

Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags

Find Us on Social Media

Edit ModuleShow Tags